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DCMS digital growth call: Towards Web 3, the Distributed Web

HelloIdeas made the following short submission to the UK DCMS's recent call for ideas around the UK's digital growth strategy. Although specific to British needs, the points should be relevent in any country.

While there are a number of possible recommendations, especially around the financing and legal challenges online and across the sharing economy, it feels the most urgent challenge is ensuring the government is working in concert with the web’s next stage of development and growth, after often running out of sync before the launch of Government Digital Services (GDS).

Given this is an open call, we have kept our advice short, but would be happy to elucidate or present on the subject.

Towards Web 3: The Distributed Web.

Some ten years after the explosion of the web’s second era of user-centred apps and services, Web 2.0, any discussion about further digital market growth now needs to come from an understanding of how and why so many digital sectors have veered towards having monopoly players. To summarise:

Any area of the web that that depends primarily on HTML, broadly-unchanged since the 90s – such as in publishing or blogging – enjoys rich competition and a diverse, varied market.

Any semi-sophisticated digital service however has needed proprietary technology to advance, leading in most sectors to a single monopoly market-leader. Netflix dominates subscription-VOD; Apple dominates transactional music and film (tVOD); Spotify subscription-music; Amazon, digital publishing; eBay, consumer-to-consumer sales; and so on.

With the exception of Spotify, most mass consumer and media services dominating their sector online are US-based, and famously mostly don’t pay tax here.

Furthermore, these services replace huge distribution, retail, exhibition, marketing and media companies across the dissemination of music, games, publishing, TV, crafts, fashion and film that until recently were often British-based and employed many.

The shift to monopoly distribution and platforms not only undermines British businesses (indeed any business other than the monopoly itself), it forces creative British companies to depend on the terms of these new middlemen – be it Amazon to sell eBooks, Netflix for subscription-VOD or the Ap Store for iOS apps – leaving them vulnerable to the pricing whims of a single-monopoly player.

For example – our film finance book was sold on Amazon physically for a 35% commission. The digital version sold for Kindle loses a 65% commission as well as VAT, making it much less financially viable. Yet the only way to sell the book on the Kindle requires accepting these terms.

This structure is less a consequence of market forces than a consequence of the limitations in the available technology on which the web was built during the period that most of these services advanced. Furthermore, ex-analogue sectors such as music and video have famously struggled to innovate digitally, unable to make serious digital revenues until Steve Jobs convinced them to back iTunes.

The appearance today of standards and protocols such as WebRTC, WebID, foaf, RDF, LDP, Microdata and so forth, has removed most of these technical limitations. There exists open source, royalty-free protocols and methods to build effectively any form of sophisticated application service, with an emerging architecture to support many servers from different providers talking to each other, rather than one monolithic service.

To best support British businesses in the future web the government needs to not only be aware of these shifts but respond. There is sufficient market and economic benefit from a more decentralised, distributed and therefore competitive approach to assume this is where the web is heading and the UK can chose to be proactive or reactiveas that happens.

GDS's open data initiatives and the work of the Open Data Institute have made a strong start in adapting to this changing landscape, and these organisations could accommodate and develop new working groups, incubators, advisory notes and training. The London conference Redecentralize is also widely respected internationally on the topic.

A more decentralised web will require a more mature and constructive conversation between technology and platform providers, and the government and security services. Engineers and technologists are used to both following industry best-practice and agreeing on compromise protocols, and could be engaged with to help address and resolve problems rather than dictated to by officials or forced to adopt new laws without consultation.

Investment in emergent decentralised 'web 3' business models could be advantageous in developing skills, thought-leadership & potential ROI as the area grows over the coming decade, as well as potentially large saving and economies of scale around shared and cross-managed datasets. Increased public investment in startups and entrepreneurs in this space would doubtless make a big difference, especially given how many struggle to access EC’s Horizon 2020 funding or Innovate UK support, often simply because it’s such a different process to startup financing, requiring a different skillset.

In short, a free market online, which limits the potential disruption of a single-monopoly-player, is now available technologically, with widely-agreed upon standards and protocols. This is in response to sufficient market and social demand to likely form a central part of new web services and products going forward. It would strongly be in Britain’s interest to be a part of that.